Cathie Wood’s Ark Investment Management has announced that it holds a stake in Silicon Valley artificial intelligence darling OpenAI, a bet that the nascent AI industry will remake the tech landscape.

In an email to clients Thursday, Ark said, “As of April 10, 2024, the Ark Venture Fund invests in OpenAI,” referring to its $54 million VC fund. “OpenAI is at the forefront of a Cambrian explosion in artificial intelligence capability,” the tech-focused asset manager said in the note.

Launched in September 2022, the closed-end Ark fund invests in both public and private firms — including Elon Musk’s SpaceX, Epic Games Inc., Freenome Holdings Inc. and Relation Therapeutics.

“Our fund is relatively new and small and for us, honestly, the incremental progress in the foundation model space has been quicker than even we had anticipated,” Ark Chief Futurist and investment committee member Brett Winton said in an interview. “We think that there’s $16 trillion in prospective market cap that will be commanded by foundation model-type companies by 2030.”

OpenAI has raised huge sums of money, most of it from Microsoft Corp. which has put in $13 billion. The company has also allowed some employees to sell shares via a so-called tender offer at an $86 billion valuation. Ark said it invested in the company through a special purpose vehicle, but declined to elaborate. OpenAI didn’t comment on the stake.

The startup will represent about 4% of the Ark venture fund’s holdings, Winton said. Ark also has a stake in rival Anthropic, accounting for about 5% of the same fund.

Wood’s most famous vehicle, Ark Innovation ETF, catapulted to fame during the height of the pandemic after making big bets on the likes of Tesla Inc. This year, the exchange-traded fund has stumbled following a decline in the share price of the electric carmaker.

The venture fund is made up of mostly private companies — around 80% of the total holdings. The value of its assets are updated daily, in an effort to give everyday investors in Ark’s product the fairest value, Winton said.

“The Sora model is mind blowing,” Winton said, referring to OpenAI’s recently released text-to-video generative AI tool. “The acceleration in the pace of innovation is mind-blowing and so we wanted the exposure.”

This article was provided by Bloomberg News.